Banks are the leading financial intermediary in the economy because they accept deposits by attracting depositors’ money, i.e., accumulating temporarily free funds. Moreover, banks provide money at a certain percentage to various economic firms, households, etc., i.e., they issue loans. The activity of banks is the channel through which changes in the money market are transformed into shifts in the commodity market. The tasks of banks are to ensure uninterrupted money and capital turnover, lending to enterprises, the state, and the population.
Banks ensure the accumulation of temporarily free funds for enterprises, organizations, the population, and the state and transfer monetary capital from the spheres of collection to the spheres of use on the repayment terms. Through banks, large amounts of money can be mobilized, necessary for investment, innovation, expansion of production, and housing construction (Zavadska, 2018). As an element of the banking system, commercial banks contribute to saving public circulation costs by facilitating the acceleration of money turnover and money transfer by issuing credit instruments instead of cash, checks, and plastic cards.
Since US banks play a significant role in the country’s economy, if people stop trusting them, their economy will suffer a colossal collapse. People need to take out loans to start their businesses, and mortgages to purchase housing, some people make deposits to receive dividends. Banks, in turn, receive income from each operation. In addition, they provide the population with specific rates that affect the entire economy of the country.
In conclusion, since banks play an essential role in the economy, they fully support the economy of the United States and other countries. Their presence is necessary so that the government is not in an economic crisis and can help its residents in any sphere of life in which it is required to attract large sums of money. To continue to trust banks, it is necessary to monitor the development strategy carefully.
Reference
Zavadska, D. (2018). Determining the role of banks in the financing of innovative development processes of the economy. Baltic Journal of Economic Studies, 4(3), 68-73. Web.